Question

Chapter 5 Exercises i Saved Mauro Products distributes a single product, a woven basket whose selling price is $21 per unit and whose variable expense is $15 per unit. The company's monthly fixed expense is $7,200. 20 points Required: 1. Calculate the company's break-even point in unit sales. 2. Calculate the company's break-even point in dollar sales. (Do not round intermediate calculations.) 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.) eBook Hint basket Break-even point in unit sales Break-even point in dollar sales Break-even point in unit sales Break-even point in dollar sales Print basket References

Answer 1

. Break even points in units will be = 2,700 units
2. Break-even point in dollar sales = $56,700
3. In case fixed expense increase by $600 then Break even point in unit sales = 2,900 units
Explanation:
Break even point = Fixed Cost/Contribution per unit  = $8,100
Contribution per unit = Sale Price - Variable Cost = $21 - $18 = $3
1. Break even points in units will be
= 8100/3 = 2700 units
2. Break-even point in dollar sales
= Break even point in units X Sale price per unit
= 2,700 units X $21 = $56,700
3. In case fixed expense increase by $600 then Break even point in unit sales
= = 2,900 units
Final Answer
1. Break even points in units will be = 2,700 units
2. Break-even point in dollar sales = $56,700
3. In case fixed expense increase by $600 then Break even point in unit sales = 2,900 units